specifically authorized for this class of cases may be taken from the portion of the gross estate situated in the United States.

§ 81.52 Deductions of administration expenses, claims, etc. (a) In estates of nonresidents not citizens, deductions from the gross estate may be taken, subject to the limitations set forth in §§ 81.29 to 81.40, inclusive, and to the limitations hereinafter stated, for the following: Funeral expenses; administration expenses; claims against the estate; unpaid mortgages; losses incurred during the settlement of the estate arising from fires, storms, shipwrecks, or other casualties, or from theft, if such losses are not compensated for by insurance or otherwise; and amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent. It is immaterial whether the amounts to be deducted were incurred or expended within or without the United States, but certain limitations are imposed which do not apply to estates of residents or citizens, namely:

(1) In case the decedent died on or before October 21, 1942, the date of the enactment of the Revenue Act of 1942, only that proportion of the aggregate deductions for administration expenses, claims, etc., is deductible which the value of that part of the gross estate situated (within the meaning of the statute) in the United States, bears to the value of the entire gross estate, wherever situated (see § 81.55), and any claim against decedent's estate founded upon a promise or agreement, even though for charitable uses, where the liability was not contracted for an adequate and full consideration in money or money's worth is not allowable. (See § 81.36.) In case the decedent died after October 21, 1942, only the proportion of the deductions specified in section 812 (b) (other than those deductions for claims hereinafter described) is deductible which the value of that part of the gross estate situated (within the meaning of the statute) in the United States bears to the value of decedent's entire gross estate wherever situated. If the decedent died after October 21, 1942, any claim against the estate founded upon an enforceable promise or agreement to make a contribution or gift to or for the use of any donee de

819593-49- -5

scribed in section 861 (a) (3) (charitable, etc., organizations) for the purposes specified in such section, where the liability was not contracted for an adequate and full consideration in money or money's worth, is allowable under section 861 (a) (1), as amended, to the extent that it would be allowable under section 861 (a) (3) if such promise or agreement constituted a bequest. (See § 81.36.)

(2) No deduction whatever may be taken unless the executor includes in the return the value of that part of the gross estate not situated in the United States. Such part of the gross estate must be valued as of the date of the decedent's death; or, if the option authorized by section 811 (j) is exercised, such part must be valued in accordance with the provisions of § 81.11.

(b) In order that the Bureau may properly pass upon the items claimed as deductions, the executor should submit a certified copy of the schedule of liabilities, claims against the estate, and expenses of administration filed under the foreign death-duty act; or, if no such schedule was filed, a certified copy of the schedule of such liabilities, claims, and expenses filed with the foreign court in which administration was had; or, if items of deduction allowable under section 861 (a) (1) were not included in either such schedule, or if no such schedules were filed, then the affidavit of the foreign executor setting forth the facts relied upon as entitling the estate to the benefit of the particular deduction or deductions.

[Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024]

§ 81.53 Deduction of the value of property previously taxed. The right to deduct the value of property received by a decedent who was a nonresident not a citizen by gift from any person within 5 years prior to his death, or by gift, bequest, devise, or inheritance from any person who died within 5 years prior to his death, or the value of property acquired in exchange for property so received, is governed by the same rules as those applying to estates of citizens or residents (§§ 81.41 to 81.43, inclusive), subject to the three following exceptions:

(a) The deduction is not available to any extent unless the executor includes in the return the value of that part of the gross estate not situated in the United

States. Such part of the gross estate must be valued as of the date of the decedent's death; or, if the option authorized by sections 811 (j) is exercised, such part must be valued in accordance with the provisions of § 81.11.

(b) The property for which the deduction is claimed must be included in that part of the gross estate situated in the United States at the time of the decedent's death.

(c) In case the decedent died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, with respect to the third limitation involving property previously taxed, set forth under § 81.41 (a) (2), wherever subsection (a), (b), or (d) of section 812 is referred to, paragraph (4), (1), or (3), respectively, of section 861 (a), as amended, should be substituted. In case the decedent died on or before October 21, 1942, instead of the amount of the deduction being reduced in accordance with the third limitation set forth under § 81.41 (b), the amount of the deduction is reduced by the proportion of the total other deductions, allowed under paragraphs (1) and (3) of subsection (a) of section 861, which the amount otherwise deductible for property previously taxed bears to the value of the part of the gross estate situated in the United States at the time of the decedent's death.

[Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024]

§ 81.54 Deduction of value of transfers for public, charitable, religious, etc., uses. The right to deduct the value of property transferred by nonresidents not citizens for public, religious, charitable, scientific, literary, or educational purposes is governed by the same rules as those applying to estates of citizens or residents (§§ 81.44 to 81.47, inclusive), subject, however, to the two following exceptions:

(a) The right is limited to transfers to corporations and associations created or organized in the United States, or to trustees for use within the United States. (b) The right is available only if the executor includes in the return the value of that part of the gross estate not situated in the United States. Such part of the gross estate must be valued as of the date of the decedent's death; or, if the option authorized by section 811 (j) is exercised, such part must be valued in accordance with the provisions of § 81.11.

Instead of duplicate copies of the documents specified in § 81.47, only one copy is required to be filed.

§ 81.55 Specific exemption and determination of net estate-(a) Specific exemption. A specific exemption of $2,000 is deductible in the case of a nonresident not a citizen of the United States if such decedent died after October 21, 1942, the date of the enactment of the Revenue Act of 1942. This exemption applies both for the purposes of the basic tax and the additional tax. No specific exemption is authorized in the case of a nonresident not a citizen of the United States if such decedent died on or before October 21, 1942.

(b) Determination of net estate. The following example will show the manner of determining the net estate of a nonresident not a citizen. The gross estate, wherever situated, amounts to $1,000,000, of which $200,000 represents the value of the property having its situs within the United States (the term "United States" including not only the several States, but also the Territories of Alaska and Hawaii, and the District of Columbia). The funeral expenses, administration expenses, and claims against the estate aggregate $150,000, and there are charitable bequests, for use within the United States, amounting to $25,000. Hence the property situated within the United States constitutes 20 percent of the entire gross estate wherever situated, and a like percentage of the $150,000 is $30,000. If the decedent died on or before October 21, 1942, the following result is accordingly obtained:

Gross estate within the United
States

20 percent of $150,000__. Charitable bequests for use within the United States__.

Net estate_

$200, 000

30,000

25,000

55, 000

145, 000

If the decedent died after October 21, 1942, an exemption of $2,000 is also deductible, resulting in a net estate of $143,000.

For the manner of computing the tax on the net estate, see § 81.7.

[Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024]

§ 81.56 Payment of tax. The provisions relating to credits (see §§ 81.8 and 81.9) and to rates and payment of the

tax are the same in estates of nonresidents not citizens and of residents or citizens. The Internal Revenue Code provides that the executor shall pay the tax. If there is no executor or administrator appointed, qualified, and acting within the United States, every person in either the actual or constructive possession of any property of the decedent is constituted by the Internal Revenue Code as executor for the purpose of tax payment, and is liable for the tax to the extent of the property so in his possession. (See §§ 81.75 to 81.82, inclusive.) All checks, drafts, or money orders should be made payable to the order of the collector of internal revenue.

§ 81.57 When notice required. A preliminary notice is required to be filed in the case of every citizen or resident whose gross estate exceeded $60,000 in value at the date of death, if the decedent died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, or $40,000 if the decedent died on or before such date. The value of the gross estate at the date of death governs with respect to the filing of the notice regardless of whether the value of the gross estate is, at the executor's election, finally determined as of a date subsequent to the date of death pursuant to the provisions of section 811 (j). The notice must be filed in duplicate within two months after the decedent's death or within two months after the executor has qualified. In the case of a resident, it must be filed with the collector in whose district the decedent had his domicile at the time of death. In the case of a nonresident citizen, it must be filed with the collector in whose district the gross estate in the United States was situated; or, if the gross estate in the United States was situated in more than one district, or, if no part of the gross estate was situated in the United States, it must be filed with the collector for the second district of New York, or with such collector as the Commissioner may designate. If there is doubt as to whether the gross estate exceeded $60,000 or $40,000, as the case may be, the notice should be filed as a matter of precaution in order to avoid the possibility of penalties attaching.

[Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024]

§ 81.58 Notice by executor or administrator. The duly qualified executor or administrator is required to file such

preliminary notice on Form 704, copies of which may be obtained from the collector, within two months after qualifying as such, if notice has not already been filed. The primary purpose of the notice is to advise the Government of the existence of taxable estates, and filing should not be delayed beyond the two months' period because of uncertainty as to the exact value of the assets. The filing of the notice within the pescribed period is mandatory, and the estimate of the gross estate called for by the notice should be the best approximation of value which can be made within the time allowed. The instructions upon the back of the form should be read carefully before executing the notice. The signature of one executor or administrator upon Form 704 is sufficient. For penalties for delinquency in filing notice, or for filing a false or fraudulent notice, see §§ 81.88, 81.89, and 81.91.

§ 81.59 Notice by others than duly qualified executor or administrator. The term "executor" embraces any person in actual or constructive possession of any property of the decedent at or after the time of the latter's death, if within two months after the decedent's death no executor or administrator qualifies. The notice on Form 704 must be filed by such persons in every case in which an executor or administrator has not duly qualified within such period. If, within the period mentioned, an executor or administrator qualifies, the duty of filing the notice devolves upon him, and all other persons are relieved therefrom.

§ 81.60 Estates of nonresidents not citizens; preliminary notice. In estates of nonresidents not citizens, notice on Form 705, copies of which may be obtained from the Commissioner of Internal Revenue, Washington 25, D. C., or from any collector of internal revenue, is required if any part of the gross estate was situated (see § 81.50) in the United States (a) provided, in the case of a decedent who died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, the part of the gross estate situated in the United States exceeded a value of $2,000 at the date of death, and (b) regardless of such value in the case of a decedent who died on or before October 21, 1942. The notice must be filed, in duplicate, by every appointed, qualified, and acting executor or administrator within the United States with the collector of internal reve

nue of the district in which such part of the gross estate was situated, or, if such part of the gross estate was situated in more than one district, it must be filed with the collector for the second district of New York or with such collector as the Commissioner may designate. If no executor or administrator has qualified, notice must be filed within two months after the date of death by every person in either the actual or constructive possession of any property of the decedent so within the United States at or after the time of his death. If such person has no knowledge of the decedent's death within two months following its occurrence, he should file the notice immediately upon obtaining such knowledge. The term "person in actual or constructive possession of any property of the decedent" (section 930) includes, among others, the decedent's agents and representatives; safe-deposit companies, warehouse companies, and other custodians of property in this country; brokers holding, as collateral, securities belonging to the decedent or investment funds owned by the decedent, and debtors of the decedent in this country. As to any moneys deposited by or for a decedent of this class with any person, corporation, or association carrying on the banking business, no notice is required, unless, however, the decedent was engaged in business in the United States at the time of his death.

[Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024]

§ 81.61 Information return by corporation or transfer agent. Upon notification from the Bureau of Internal Revenue a corporation (organized or created in the United States), or its transfer agent will be required to file a return disclosing the following information pertaining to stocks or bonds registered in the name of a nonresident decedent (regardless of citizenship): (a) Name of decedent is registered; (b) date of death, residence, place of death, and names and addresses of executors, attorneys, or other representatives, within and without the United States, if known; and (c) a description of the securities and the number of shares or bonds and the par values. Treasury Department Form 714, which will be supplied by the Bureau upon request, may be used for the return.

§ 81.62 Transfer certificates. Certificates permitting the transfer of property

of nonresident decedents (regardless of citizenship) without liability will be issued by the Commissioner when he is satisfied that the tax imposed upon the estate, if any, has been fully discharged or provided for. The tax will be considered fully discharged for the purpose of the issuance of a transfer certificate only when investigation has been completed and payment of the tax, including any deficiency finally determined, has been made. If the tax liability has not been fully discharged transfer certificates may be issued permitting the transfer of particular items of property without liability upon the filing with the Commissioner of such security as he may require. Except as hereinafter stated, no domestic corporation or its transfer agent should transfer stock registered in the name of a nonresident decedent without first requiring a transfer certificate covering all of the decedent's stock of the corporation and showing that such transfer may be made without liability, and banks, trust companies and others in actual or constructive possession of property of nonresident decedents should require transfer certificates before transferring such property. If the decedent died after October 21, 1942, a transfer certificate is not required in case the total value, as of the date of the decedent's death, of the part of his gross estate situated in the United States is not in excess of $2,000. In the case of a decedent who died after October 21, 1942, such corporation, transfer agent, bank, trust company or other person will not incur liability for the transfer of such property without the issuance of a transfer certificate, if such corporation or other person first receives a statement from the executor or other responsible person, who may be reasonably regarded as in possession of the pertinent facts, showing that the total value, as of the date of the decedent's death, of the part of his gross estate situated in the United States is not in excess of $2,000, and if such corporation or other person has no information to the contrary. However, a transfer certificate need not be required for bonds owned by a decedent who was a nonresident not a citizen if it is known that such bonds were not physically situated in the United States at the time of death. Corporations, transfer agents, banks, trust companies, or other custodians can insure avoidance of liability for tax and penalties only by demanding and receiv

ing transfer certificates, as provided in this section, prior to transfer of property of nonresident decedents.

The requirements of this section and § 81.61 do not apply if there is an executor or administrator appointed, qualified, and acting within the United States. [Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3035]

§ 81.63 When return required; date of filing. A return on Form 706 is required in the case of every citizen or resident, whose gross estate, as defined in the statute, exceeded $60,000 in value at the date of death if the decedent died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, or $40,000 if the decedent died on or before such date. The duty to file a return depends upon the value of the gross estate on the date of the decedent's death, regardless of any valuation as of a subsequent time that the executor may use by virtue of his election under subsection (j) of section 811, since such election may be made only upon the return. In the case of a resident, the return must be filed with the collector in whose district the decedent had his domicile at the time of death. In the case of a nonresident citizen, it must be filed with the collector in whose district the gross estate in the United States was situated; or, if the gross estate in the United States was situated in more than one district, or, if no part of the gross estate was situated in the United States, it must be filed with the collector for the second district of New York, or with such collector as the Commissioner may designate. The return on Form 706 must be filed in duplicate with 15 months after the date of death. The due date is the day of the fifteenth calendar month after the decedent's death numerically corresponding to the day of the calendar month in which death occurred, except that, if there is no numerically corresponding day in such fifteenth month, the last day of such fifteenth month is the due date. For example, if the decedent died on August 31, 1939, the due date is November 30, 1940. If the due date for filing the return falls on a Sunday or on a legal holiday, the due date for filing will be the day following such Sunday or legal holiday. If placed in the mails the return should be posted in ample time to reach the collector's office, under ordinary handling of the mails, on or before the date on which the return is required to be filed. If a return is

made and placed in the mails in due course, properly addressed, and postage paid, in ample time to reach the office of the collector on or before the due date, the filing will not be regarded as delinquent should the return not be actually received by such officer until subsequent to that date. As to penalty for failure to file the return within the time prescribed, see § 81.89. As to loss of the option to have the property valued as of a date or dates subsequent to the decedent's death by failing to file the return within the time prescribed, see § 81.11.

[Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3035]

§ 81.64 Persons liable for return. The Internal Revenue Code provides that the duly qualified executor or administrator shall file the return. If there is more than one executor or administrator, the return must be made jointly by all. If no executor or administrator has been appointed, every person in actual or constructive possession of any property of the decedent is constituted by the Internal Revenue Code an executor for the purposes of the tax (section 930), and is required to make and file a return as provided by section 821. If, in any case, the executor is unable to make a complete return as to any part of the gross estate, he is required to give all the information he has as to such property, including a full description, and the name of every person holding a legal or beneficial interest in the property. If the executor is unable to make a return as to any property, the Internal Revenue Code requires that every person holding a legal or beneficial interest therein shall, upon notice from the collector, make return as to such part of the gross estate. For penalties for delinquency in filing return, or for filing a false or fraudulent return, see §§ 81.88, 81.89, and 81.91.

§ 81.65 Preparation of return. (a) The return must be made on Form 706, copies of which will be supplied by the collector upon application. It must be filed in duplicate under oath and contain an itemized inventory by schedule of the property constituting the gross estate and lists of the deductions under the appropriate schedules. The return must set forth (1) the value of the gross estate (see §§ 81.10-81.28), (2) the deductions allowed (see §§ 81.29-81.48), (3) the value of the net estate, and (4) the tax paid or payable thereon.

The